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Tag Archives: Inflation

The Commerce Department reported on Friday that the U.S. economy shrank at an annual rate of 0.7 percent, a sharp downward revision from its previous tepid estimate that it would grow by 0.2 percent.

It caught most mainstream economists off guard once again, with many predicting positive growth right up until Friday, and more remaining doggedly optimistic that growth will return. Economists polled by the Wall Street Journal just 10 days ago were holding to a 3-percent growth rate in the economy for 2015, while analysts polled by the AP just prior to the release on Friday were still predicting growth of between 2 and 2.5 percent for the year.

Paul Ashworth, chief U.S. economist at Capital Economics, is waiting for evidence that growth will return in the second quarter:

Observers of new highs being put in by stocks at the Wall Street Journal could hardly restrain themselves. Eric Morath and Ben Leubsdorf, writing in the Journal on Tuesday, noted that the economy is now enjoying “a sweet spot of robust growth, sustained hiring, and falling unemployment [which is] stirring optimism that a post-recession breakout has arrived.”

Translation: Good times are here again, and likely to continue. Break out the Brie and Chablis.

Looking past the celebrations and the prognostications seemed, at first view, to confirm the market’s outlook:

This article first appeared online at TheNewAmerican.com on Friday, December 5, 2014:

It made headline news when a OnCue Express station in Oklahoma City dropped its price for regular unleaded gasoline to $1.99 gallon on Wednesday. What didn’t make the headlines is what happened next: Drivers seeking to save a few pennies created long lines at OnCue, and so another station down the street, responding to the competition, cut its price to $1.98 a gallon. By the end of the day, another station located in nearby Moore, Oklahoma, cut its price to $1.95 a gallon.

This article first appeared online at TheNewAmerican.com on Thursday, December 4, 2014:

Banknotes of the Swiss franc

The Swiss voted down the initiative “Save Our Swiss Gold” on Sunday, November 30, by a margin of three to one, rejecting efforts to shore up the Swiss National Bank’s (SNB) balance sheet. Switzerland, a direct democracy, entertains an average of five such referendums every year, and most of them fail. This initiative would have required the SNB to boost its gold bullion holdings from its current eight percent level to 20 percent over the next five years. It would also have required the central bank to repatriate its foreign-held gold reserves, while prohibiting it from ever selling any of those reserves in the future.

When first proposed, speculators bought the Swiss franc cheap, hoping to sell it dear if the initiative passed. Investors in gold were holding their breaths as well, noting that

This article first appeared at the McAlvany Intelligence Advisor on Friday, August 29, 2014:

Foreign Affairs

What happens when a college professor meets up with a graduate student from Oxford University, intending to solve the world’s economic problems? What happens when they consider that the previous attempts to revive the economy have failed and their recommendation is to do more of the same?

The title of their resultant article in Foreign Affairs – the premier publication of the Council on Foreign Relations – explains it all:

This article first appeared at TheNewAmerican.com on Thursday, August 28, 2014:

Mark Blythe, a professor at Brown University, and Eric Lonergan, a hedge fund manager living in London, have conjured the ultimate solution to a stagnant economy: Central banks should give away free money.

These two authors of a lengthy and allegedly erudite article in the September/October 2014 issue of Foreign Affairs, published by the Council on Foreign Relations (CFR), appear to be living in an alternate universe, as their suggestion, if it were fully implemented, would push the world’s economy back to the Dark Ages.

The article, entitled “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People,” rests on the false assumption that

This article was first published at TheNewAmerican.com on Monday, August 4, 2014:

To Jeffry Bartash, writing for the Wall Street Journal’s MarketWatch, Friday’s jobs report looked awfully good: 209,000 new jobs were added in July and in all the right places: mining, construction, manufacturing, transportation, and warehousing. In addition, there was almost no growth whatsoever in the “government” sector: just 11,000 new jobs were created there last month. This, according to Bartash, means that the economy is on a hot streak, having generated more than 200,000 new jobs every month for the last six months — the first time that has happened since 1997.

Added Bartash:

In the first seven months of 2014 the economy has gained an average of 230,000 jobs. That’s the best stretch of job creation since the [Great Recession] ended in mid-2009 and 19% faster than the pace of hiring in 2013.

This article first appeared at the McAlvany Intelligence Advisor on Monday, August 4, 2014:

Criss Jami, the lead singer of the rock band Venus in Arms, may reasonably be accused of having given the president lessons in deceit, especially as they both live in the city where truth-telling is a lost art. Said Jami:

Just because something isn’t a lie does not mean that it isn’t deceptive. A liar knows that he is a liar, but one who speaks mere portions of truth in order to deceive is a craftsman of destruction.

When Friday’s jobs report came out from the Bureau of Labor Statistics (BLS), President Obama spoke “mere portions” of its truth:

This article was first published by The McAlvany Intelligence Advisor on Monday, July 14, 2014:

Historical government spending in the United States from 1902 to 2010

Back in February the Congressional Budget Office (CBO) estimated that the deficit for the 2014 fiscal year would be $514 billion, or about 3 percent of the total economic output of the country. Since this was a nearly 27 percent drop from last year, the implication is that all is well, nothing to see here, move along please. After all, the perception has been that the White House has been spending money faster than at any time in history, running up deficits and the national debt to staggering levels. Half a trillion? Is that all? Pocket change!

Greg Valliere, the chief political strategist for the Potomac Research Group, said at the time that this guaranteed that there would be no pressure for any sort of entitlement reform this year. Jack Lew, Obama’s Treasury Secretary, said the numbers bought some time: “We have a little time to deal with the long term.”

Last week both the White House and the CBO revised downward even further the expected deficit, with Obama taking full credit for the result:

The false assumption that regulators can be safely counted upon to steer economies – local, national or global – to full employment with minimal inflation while avoiding booms and busts was unknowingly exposed in the latest yelp from the Deputy Managing Director of the International Monetary Fund (IMF), Zhu Min. In Chinese, his name means “people rule” or “democracy” but his ideology is firmly rooted in the Keynesian fallacy that economies can be successfully managed by experts without assistance or input from the common folk.

In announcing that the IMF has launched a new website, Global Housing Watch, Min delights in thinking that the world’s economy can be driven by looking through the rear view mirror. He said:

Something that the lamestream media missed entirely happened on Wednesday, June 4, in Oklahoma: the governor signed into law a bill affirming what is already guaranteed to each state in the US Constitution: that gold and silver coin are legal tender. Historians looking back may recall that day as the day the Federal Reserve’s hegemony over money ended.

It didn’t take long for the skeptics to scoff at the costs of the latest effort to upgrade the fleet of presidential helicopters announced by the Defense Department on Wednesday, May 7. They say the $1.2 billion contract awarded to Sikorsky Aircraft Corporation will be just the beginning.

There are at least two reasons to be skeptical: the open-ended nature of the White House requirements and recent history. The Department of Defense outlined its requirements, stating that Marine Helicopter Squadron One which currently operates 19 presidential helicopters, must provide

Safe and timely transportation for the President and Vice President of the United States, heads of state and others as directed by the White House Military Office.

In addition, each aircraft must be equipped with various self-defense features such as bullet-proof glass and body panels and specialized communications equipment that allows the president to maintain “critical command functions” while airborne. Each needs to be large enough to carry up to 14 passengers and several thousand pounds of baggage while being small enough to operate from the White House lawn.

Each must have a minimum range of 300 miles and carry a full complement of defensive countermeasures to thwart heat-seeking and radar-directed missiles and also be hardened against an EMP (electromagnetic pulse), either from an enemy or from the sun. It must be able to send and receive encrypted communications and hold secure teleconferences while in flight.

And each must have air-conditioning and a toilet.

Under the contract Sikorsky promises to deliver two prototypes by 2016, with another 21 fully operational aircraft six years later.

Titled “The Government Debt Iceberg”, the latest report from The Institute of Economic Affairs (IEA) in London was meant primarily for British eyes, but there’s enough in there to concern Americans worried about how

President Obama’s proposal to double the earned income tax credit (EITC) for the working poor on March 4 came with all the attendant benefits such an expansion would provide: it would reduce poverty while encouraging people not working to get a job. It would expand the existing law to cover an additional 16 million families with 30 million children.

In his State of the Union Address in January, the president warned this was coming,

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, February 5, 2014:

Just reading the headlines, the average citizen is likely to think that now that the deficits are under control Washington can focus on problems elsewhere. The Congressional Budget Office (CBO) estimated in May that the current year’s deficit would come in at $560 billion, half what it was just two years ago. In its report released on Tuesday, it was pleased to note that

At first reading the latest report on the government budget and the economy released on Tuesday by the Congressional Budget Office (CBO) is all sunshine and roses. In its summary of the 182-page report the CBO noted that deficits this year (from last October to next September) will be even lower than initially estimated, dropping to $514 billion, down from $680 billion last year and $1.1 trillion in 2012. And, in the very short run at least, further declines in deficits are expected through 2015, perhaps touching a low of

While Wall Street declined by 3 percent over global growth concerns last week, few were noting or even interested in the 11 percent decline in the Merval, Argentina’s stock market index. It hit a high of 5,970 on Tuesday, January 21, the day before the Argentina government devalued its currency, and closed at 5,337 on Monday. The peso itself has been in decline far longer, having lost nearly

The populist notion of taxing the rich once again turned up in the International Monetary Fund’s “Fiscal Monitor Report” released in October, but scarcely anyone noticed. In an arcane chart-laden 107-page long report that was competing at the time with the government shutdown, the failing rollout of Obamacare, and other concerns, crises and disasters, why would they?